Rent vs Buy Calculator

Compare the total cost of renting versus buying over time, including investment opportunity costs

🏠 Home Purchase Details

Home Purchase Price ($)

Down Payment (%)

Mortgage Interest Rate (%)

Loan Term (Years)

🏡 Additional Homeownership Costs

Property Tax (Annual $) Typically 1-2% of home value annually

Homeowners Insurance (Annual $)

Maintenance & Repairs (Annual $) Typically 1-3% of home value annually

HOA Fees (Monthly $)

Closing Costs ($) Typically 2-5% of home price

Home Appreciation Rate (% annually) Historical average ~3-4%

🏠 Rental Details

Monthly Rent ($)

Annual Rent Increase (%) Typical range 2-5% annually

Renter's Insurance (Annual $)

Security Deposit ($) Typically 1-2 months rent

📈 Investment & Analysis

Investment Return Rate (% annually) Expected return on down payment if invested instead

Analysis Period (Years) How long do you plan to stay?

Selling Costs (% of home value) Realtor fees, closing costs, etc.

Rent vs Buy Analysis

🏠 Buying

🏡 Renting

Investment Opportunity Analysis

Key Insights

Understanding the Calculations

🏠 Buying Net Worth Calculation

Formula: Home Value at End - Remaining Mortgage Balance - Selling Costs

Components:

Home appreciates at your specified rate annually
Mortgage balance decreases with each payment
Selling costs (realtor fees, etc.) reduce final proceeds

Note: This is your actual wealth from owning the home after selling.

📈 Renting + Investing Net Worth

Formula: Investment Portfolio Value

Components:

Initial: Down payment + closing costs invested
Monthly: If buying costs MORE than renting, invest the difference
Growth: Compound returns at your specified rate

Important: Rent payments are NOT subtracted from investment value!

💡 Why Rent Isn't Subtracted

The comparison is net worth, not cash flow:

Buying: You pay mortgage + costs → Get home equity
Renting: You pay rent → Get investment portfolio

Both scenarios have housing costs. We're comparing what wealth you build (home equity vs investments), not tracking expenses.

💰 Monthly Savings Calculation

Formula: Total Monthly Ownership Cost - (Monthly Rent + Renter's Insurance)

If positive: Renting is cheaper → invest the savings monthly

If negative: Buying is cheaper → no additional monthly investment

This captures the opportunity to invest money saved by renting.

🔄 Total Cost Comparison

Buying Costs: Down payment + All payments + Maintenance - Home equity recovered

Renting Costs: All rent payments + Insurance + Security deposit

These are shown for context but the net worth comparison is what matters for the recommendation.

🎯 Final Recommendation

Formula: Buying Net Worth - Renting Net Worth

If positive: Buying leaves you wealthier

If negative: Renting + investing leaves you wealthier

The recommendation is based purely on which path builds more wealth.

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